You are here: Home - News -

Lending too high, says Datamonitor

  • 28/07/2003
  • 0
Gross advances in mortgage lending will create problems if they continue to increase at their curren...

Gross advances in mortgage lending will create problems if they continue to increase at their current rate, according to market analysts Datamonitor.

Its report Housing Market ‘ Boom or Bust? notes that first-time buyers are being priced out of the market which will starve lenders of clients. The report also points out that remortgaging is now the market driver, at 51% of all lending, as house purchases are slowing significantly.

Recent Bank base rate cuts have not helped matters, according to Alex Boorman, analyst at Datamonitor and report author. He said: ‘If and when lenders pass on the rate reduction to borrowers the cost of mortgages will fall. Such a development could add further fire to the housing market raising potential for a significant slowdown over the next 12 months.’

Steve Sandiford, head of borrowing products at BM Solutions, said: ‘It is true the market is not sustainable at present growth levels, but we are seeing a levelling out of prices, and eventually the price asked will match the price first-time buyers are willing to pay. The question is, how long that will take to happen, and if the present levels of remortgaging and equity withdrawal will last long enough until that happens.’

Despite the problems it will cause, Datamonitor forsees continued growth and concludes that gross advances will remain buoyed by rising house prices and low interest rates, with the total exceeding £240bn by the end of 2007.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.

Read previous post:
Recent results reflect growth in new lending

Sub-prime lender Kensington Group has more than doubled its new lending in the first half of this ye...